Bringing gay media out of the closet

The success of gay-themed cable channel Logo testifies to the power of a loyal audience, says Fortune's Marc Gunther.

NEW YORK (Fortune) -- When MTV Networks launched Logo, a cable TV channel for gay and lesbian viewers, in 2005, people expected a backlash.

The company sent staff members to Tulsa, where DirecTV (Charts) has a call center, to coach customer service reps on how to deal with complaints. Many cable operators were
reluctant to carry the channel. And only three advertisers signed up as charter sponsors - the travel Web site Orbitz, Subaru, and the Paramount film studio, which like MTV, is
owned by Viacom (Charts).

You can't blame them. Cable operators and advertisers typically take a wait-and-see approach to new channels. And Logo was a special case. Before it came along, gay media was
dominated by free local newspapers that were mostly financed by personal ads, by Web sites and AOL chat rooms where users could remain anonymous, by a pay TV network called Here!
that viewers had to invite into their homes, and by The Advocate, a 37-year-old national magazine that even today arrives in a black envelope.

Logo has brought gay media out of the closet. The channel will soon reach nearly 25 million homes, and MTV Networks, which has clout because of the popularity of MTV and
Nickelodeon, has made distribution deals for Logo with every major cable operator. Logo also has more than 80 advertisers, including such major brands as American Express (Charts), Intel (Charts), Kodak, Lexus, Pepsi (Charts) and Sears.

As for the backlash, it never happened. "It was like, hey, what's the big deal," says Brian Graden, president of Logo, who is also a top programming executive for MTV's music
networks. One advertiser received some negative e-mails generated by a Christian conservative group, but that was about it.

Not that the channel has avoided complaints. It turned out that gay, lesbian, bisexual and transgender (GLBT) viewers were so hungry for their own TV network that they tuned in for
hours at a time. They found that Logo, as a startup with a limited programming budget, was re-running programs again and again.

"You have a very loyal audience, but people are screaming for more content," says Howard Buford, founder and CEO of Prime Access, an ad agency that specializes in black, Hispanic
and GLBT audiences. If Logo wants to keep growing, Viacom will have to invest more in new programs, he says. This is the case even though Logo actually airs more original content
than many startup networks do - about 10 new series, 50 documentaries and 200 films that had a very limited release before their exposure on the network.

Logo is not rated by Nielsen, so it's hard to know how many are watching. MTV says the channel's biggest hit is Noah's Ark, a half-hour comedy drama about four black gay men
in Los Angeles. Two seasons, with a total of 17 episodes, have been made. Other programs include Real Momentum, a documentary series, a reality show called Jacob and
Joshua about gay brothers in the music industry and a music series called NewNowNext. Independent, gay-themed movies such as "Boys Don't Cry" and "In & Out" also have
found a home on the network.

Reaction from the GLBT audience generally has been favorable. "Logo has really become like a campfire that GLBT people are gravitating towards," says Damon Romine, entertainment
media director of GLAAD, the Gay & Lesbian Allliance Against Defamation. "We've never fully seen our lives represented on television before."

According to Buford, Logo has become an efficient way for advertisers to target the GLBT audience. In the past, they could reach gay viewers by buying commercials on such programs
as Bravo's Queer Eye for the Straight Guy and NBC's Will and Grace. But buying ads on those shows was far more expensive than buying spots on Logo, which reaches a
smaller but more targeted audience.

Logo's own research - which, like all research released by TV networks, should be viewed skeptically - has found that its viewers are likely to reward sponsors perceived as
supporting the gay community. "Logo viewers are actually turning up the volume during commercials," says Lisa Sherman, Logo's general manager.

That's hard to believe. But there's little doubt that for the viewers and for the people working at Logo, most of whom are gay or lesbian, this is more than another cable TV
channel. It's a cause.

"It's one of those blessings that landed in my lap," says Graden, 43, a gay executive and MTV Networks veteran. Sherman, who joined the channel after 18 years as a marketing
executive at Verizon, puts it this way: "We are breaking out of the ghetto in a way it's never been done before."